Vertical Product Location Effect on Sales : A Field Experiment in Convenience Stores

Retailers move products to eye-level shelves to boost their sales. However, little is known on what happens to the sales of products moved to other shelves as a result of bringing a product to the eye-level. We study how simultaneously changing the vertical locations of multiple products affects sales and whether this effect varies across products. To measure these effects, we designed a novel field experiment and deployed it in six retail stores for 20 weeks. Our results show that the effect of vertical location change is (i) contingent on how other products are reorganized as a result of that change and (ii) heterogeneous across products. On average, the eye-level generates 13.8% and 8.5% higher sales relative to the stoop- and stretch-levels, respectively. We characterize the product profiles that benefit the most from being displayed at the eye-level. We also convey that the eye-level shelf boost in sales comes at the expense of a sales loss for products moved to other shelves. Specifically, we observe a pure substitution pattern, so that there is no change in the overall sales of the shelving unit. Still, given the differences in product margins and interplay among products (arising from simultaneously changing vertical locations), retailers can benefit from carefully selecting the products to display at the eye-level. A counterfactual analysis shows that optimizing planograms by considering the average interplay among products can increase profits by 2.2%. In addition, incorporating product heterogeneity into planogram optimization can boost profits by up to 3%